A business law blog published by the business lawyers at AttorneyBritt - Gary L. Britt, CPA, J.D. Commentary and information regarding the laws and regulations applicable to individuals, corporations, partnerships, and limited liability companies (LLCs); as they relate to the myriad of business transactions, contracts, and agreements every business owner, shareholder, member, physician, and/or health care provider must consider.

Tuesday, November 24, 2015

WASHINGTON —The Internal Revenue Service today simplified the
paperwork and recordkeeping requirements for small businesses by raising
from $500 to $2,500 the safe harbor threshold for deducting certain
capital items.

The change affects businesses that do not maintain "an applicable
financial statement" (i.e., don't regularly produce audited financial statements). It applies to amounts
spent to acquire, produce or improve tangible property that would
normally qualify as a capital item. For taxpayers with an applicable financial statement (i.e. audited
financial statements), the de minimis or small-dollar threshold remains
$5,000.

The new $2,500 threshold applies to any such item substantiated by an
invoice. As a result, small businesses will be able to immediately
deduct many expenditures that would otherwise need to be spread over a
period of years through annual depreciation deductions.

As before, businesses can still claim otherwise deductible repair and
maintenance costs, even if they exceed the $2,500 threshold.
The new $2,500 threshold takes effect starting with tax year 2016. In
addition, the IRS will provide audit protection to eligible businesses
by not challenging use of the new $2,500 threshold in tax years prior to
2016.

Further details on this change can be found in Notice 2015-82, posted today on IRS.gov.

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